Follow the money
December 3, 2009 3:58 PM Subscribe
Secrecy Jurisdictions: Mapping the Faultlines highlights research on 'the jurisdictions and mechanisms used to facilitate illicit financial flows worldwide, including especially flows from developing countries. Those flows, from developing countries alone, are estimated at $850 billion - US$1 trillion per year. At the core of this project is the biggest survey of tax havens, or secrecy jurisdictions as we prefer to call them, that has probably ever been undertaken.' A project of the Tax Justice Network.
Incorporated raiders! It's back to the earliest days of capitalism a la East India Company; all you need is a boat, loose morals and a yen for adventure.
posted by Abiezer at 4:10 PM on December 3, 2009
posted by Abiezer at 4:10 PM on December 3, 2009
In addition, our tax system is rife with opportunities to evade and avoid taxes through offshore tax havens:
* In 2004, the most recent year for which data is available, U.S. multinational corporations paid about $16 billion of U.S. tax on approximately $700 billion of foreign active earnings – an effective U.S. tax rate of about 2.3%.
* A January 2009 GAO report found that of the 100 largest U.S. corporations, 83 have subsidiaries in tax havens.
* In the Cayman Islands, one address alone houses 18,857 corporations, very few of which have a physical presence in the islands.
It's a wonderful time to be a mega-corporation tax cheat, I guess:
For example, the Big Four accounting firm Ernst & Young alone has more than 900 partners in its offices around the world working on this scheme by which corporations use intra-firm transactions to reduce their profits in high-tax jurisdictions. Experts estimate that transfer pricing alone costs the government at least $50 billion in lost revenues each year.
The result is that, while the statutory rate may be 35 percent, in 2004 (the most recent year for which data was available) large corporations paid an effective rate of only 25.2 percent on domestic income, according to the General Accounting Office (GAO). Moreover, most large multinationals pay far less. In January, the GAO reported that U.S. multinationals paid just $16 billion in U.S. taxes on $700 billion of foreign active earnings in 2004—an effective U.S. tax rate of just 2.4 percent.
Let's just hope the corporate lobbyists and bought-off politicians can find a way to avoid doing anything about the problem and smother any hope for reform before people realize they're being robbed blind.
posted by peppito at 5:43 PM on December 3, 2009
* In 2004, the most recent year for which data is available, U.S. multinational corporations paid about $16 billion of U.S. tax on approximately $700 billion of foreign active earnings – an effective U.S. tax rate of about 2.3%.
* A January 2009 GAO report found that of the 100 largest U.S. corporations, 83 have subsidiaries in tax havens.
* In the Cayman Islands, one address alone houses 18,857 corporations, very few of which have a physical presence in the islands.
It's a wonderful time to be a mega-corporation tax cheat, I guess:
For example, the Big Four accounting firm Ernst & Young alone has more than 900 partners in its offices around the world working on this scheme by which corporations use intra-firm transactions to reduce their profits in high-tax jurisdictions. Experts estimate that transfer pricing alone costs the government at least $50 billion in lost revenues each year.
The result is that, while the statutory rate may be 35 percent, in 2004 (the most recent year for which data was available) large corporations paid an effective rate of only 25.2 percent on domestic income, according to the General Accounting Office (GAO). Moreover, most large multinationals pay far less. In January, the GAO reported that U.S. multinationals paid just $16 billion in U.S. taxes on $700 billion of foreign active earnings in 2004—an effective U.S. tax rate of just 2.4 percent.
Let's just hope the corporate lobbyists and bought-off politicians can find a way to avoid doing anything about the problem and smother any hope for reform before people realize they're being robbed blind.
posted by peppito at 5:43 PM on December 3, 2009
Let's just hope the corporate lobbyists and bought-off politicians can find a way to avoid doing anything about the problem and smother any hope for reform before people realize they're being robbed blind.
Again - for the trillionth time.
posted by peppito at 5:48 PM on December 3, 2009 [1 favorite]
Again - for the trillionth time.
posted by peppito at 5:48 PM on December 3, 2009 [1 favorite]
Simply put, it is too easy to do this. Company A has a subsidiary B, in a low-tax place. Goods are made and sold all over. But they are owned and sold by B. Doesn't matter where they are made or sold. B owns them, B sells them, and taxes are paid based on B's locality.
But it's clear, the solution to the US government's financial woes is to reduce medicare and social security payments. That's where the savings can be found.
posted by Goofyy at 1:06 AM on December 5, 2009 [1 favorite]
But it's clear, the solution to the US government's financial woes is to reduce medicare and social security payments. That's where the savings can be found.
posted by Goofyy at 1:06 AM on December 5, 2009 [1 favorite]
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